Displaying items by tag: reg bi

(Washington)

The SEC is sending some very disconcerting (if you are advisor), and not so subtle signals on its plans. This version of the SEC has taken a very different tact in its appointment of critical staff. Effectively, it has closed the revolving door. And what we mean, is that in contrast to previous SECs, this one has brought almost no one in from the industry at a senior position. Instead, it is being staffed with prosecutors, consumer advocates, and other regulatory-oriented government types. The appointments seem to be a reflection of Gensler’s policies priorities and views on how he wants the SEC to conduct itself during the Biden era.

FINSUM: The SEC is sending the loudest message it possibly can without writing it on the wall. The “read between the lines” is clear: enforcement is going to be intense.

(New York)

Annuities have had a very strong 18 months or so. Ever since the pandemic began, demand has risen. Additionally, the pending inclusion of annuities in 401(k) plans will be a tailwind. However, a new regulation was just put in place in Connecticut which could spell trouble for the asset class. The state just put annuities under a best interest rule, the 16th state to do so. States have continued to use the National Association for Insurance Commissioners’ model rule as a template for covering annuities under BI legislation.

FINSUM: How far might this go? We think not too much further, if only because many of the states that would want to pass a fiduciary rule for annuities have already done so, which means that even if the DOL drags its feet on its new rule, most of the state-level regulations would have already happened.

(Washington)

If there were ever a sign of things to come from the SEC, this is it. There has been a lot of speculation about how the SEC will approach enforcement of Reg BI under new chief Gary Gensler. It is widely expected that the new administration will be much tougher than under Trump. But even with that expectation, this week’s move is big. The SEC just hired the every-broker-curses-her-name longtime head of investor protection at the Consumer Federation of America Barbara Roper as a senior adviser. Roper has been by far the biggest critic of Reg BI and was the biggest proponent of the Obama era DOL Rule.

FINSUM: The SEC could not have done a better job of signaling where things are heading. Time to buckle down on your compliance and start setting aside working capital to deal with beefed up protocols and more investigations.

(Washington)

Advisors better get ready because the Trumpian era of relatively loose SEC enforcement is about to come to an abrupt end. The SEC has just appointed a new enforcement chief and his record says everything about where the Commission is heading. Gurbir Grewal, former State Attorney General for New Jersey has been appointed as the SEC’s top enforcer. Very notably, Grewal proactively proposed a uniform fiduciary standard in his home state of New Jersey, which speaks volumes about his views.

FINSUM: So the bottom line here is that this is the clearest sign yet that the SEC seems likely to rather dramatically scale up its enforcement. Many are now expecting that the SEC will define “best interest” and then employ Grewal as a strongman on enforcement.

(Washington)

The Department of Labor has just clarified one of the major uncertainties surrounding the current iteration of the fiduciary rule, and the news is not good for advisors. The DOL now clearly states that any invest recommendations that would occur post rollover are directly akin to recommending the rollover itself. NAPA Net summarized the changed, which was clarified by Tim Hauser at the DOL (Deputy Assistant Secretary for National Office Operations at the Department of Labor’s Employee Benefits Security Administration) this way: “Suggesting investments that could occur after a rollover is tantamount to recommending a rollover, and if it meets the rest of the five-part test will constitute fiduciary advice, regardless of how it’s phrased. It doesn’t require the ‘magic words’”.

FINSUM: This is a response to some clever drafting that firms were trying to use to get around the “rollovers are fiduciary advice” mandate. Very important development.